Seattle City Council to move forward on ride-service regulations

On Monday, the Seattle City Council is expected to take its biggest step yet in regulating Lyft, uberX and Sidecar, the ride-service companies that use smartphone apps to connect passengers with drivers using their personal vehicles.

Almost no one is satisfied with the proposal up for a final vote, which would limit each company to a maximum of 150 drivers on the road at any one time, collectively limiting them to 450 drivers working at the same time.

UberX and Lyft have said that isn’t enough drivers to meet demand and that they will shut down operations in the city if it’s passed. Taxi and for-hire advocates say the cap won’t last and the city will devolve into a deregulation experiment reminiscent of one that failed in the 1980s. Smartphone-savvy fans of what the city calls transportation network companies (TNCs) say the free market should dictate what happens with the ride-service industry, not the city.

Building consensus around fair regulations for taxis, for-hire vehicles and TNCs has been a tall order for City Council members.

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For a year now, the council’s taxi committee — usually consisting of Sally Clark, Bruce Harrell and Mike O’Brien — has been meeting about every month in chambers packed with irate drivers and taxi owners anxious about the new direction the city’s ride-service industry is heading.

It’s an experience that has all council members thinking about getting rid of old city regulations.

Councilmembers Sally Bagshaw, Tim Burgess and Tom Rasmussen would like to see all ride services — taxis, for-hire and TNCs — be able to operate within the city without limits placed on how many drivers and vehicles they can have.

Other council members aren’t in favor of deregulation going that far. But O’Brien said he thinks some things, such as customer-service regulations that mandate how drivers should dress, could be done away with completely.

“We need to do some strategic thinking about when it makes sense for us to weigh in and when does it not,” O’Brien said last week.

Heated debates

Historically, changing taxi regulations is a messy business that draws heated debates between unsatisfied customers and those whose jobs are at stake.

The Seattle City Council has been guiding the direction of the for-hire and taxi industry since 1915, when it first licensed 1,451 drivers and tested 47 taxicab meters.

Since then, the council has regulated, deregulated and then regulated again.

For instance, the city first made it illegal for taxi owners to lease their vehicles to other drivers, sometimes for extremely high rates, in 1954. The council then repealed that in 1975.

Four years later, when 400 taxicabs operated in Seattle, the city decided to lift all limits on entry to the market and establish maximum rates that would allow for more price competition. In the years before, the industry had suffered the effects of big layoffs at Boeing and higher gas prices.

“The goal we’ve been trying to achieve in the city of Seattle is to improve taxi service to the public by improving the economic health of the taxicab industry,” said then-City Councilmember Randy Revelle in 1980, according to a City of Seattle report titled “Taxicab Deregulation and Reregulation in Seattle: Lessons Learned.”

“We believe the best way to accomplish that is for government not to interfere with private industry unless there is a good reason,” Revelle said.

But the deregulation didn’t accomplish many of the goals Revelle hoped it would.

Drivers flooded the market and made it difficult for many to make a good living.

“The quality of cars were bad because (drivers) didn’t have money to fix them,” said Stacy Anderson, 58, who drove for one of the city’s main taxi companies at the time, Gray Top.

He remembers how an investment he and two friends placed in three taxi vehicles failed after 1979. He stopped driving the next year.

But he remembers some drivers did well. Some would surprise customers used to regulated rates with exorbitant fees at the end of their rides. Other companies had rates so low they became the most popular and couldn’t keep up with business.

Industry issues

By the mid-1980s, Seattle and King County started to discuss regulating the industry again.

“The industry is perceived as no longer being profitable and that has affected service,” Metropolitan King County Councilmember Ron Sims said in 1986. “Deregulation of the taxi industry has not been proven … to be a good decision.”

In 1990, Seattle did the opposite of what it did in 1979: It put a moratorium on issuing new taxi licenses — one that hasn’t ended. The city hasn’t issued a new taxi license in 23 years.

Taxi and for-hire vehicle owners and drivers are sure that if Seattle ever completely lifts limits on ride-service vehicles, the city will regret the decision for the same reasons.

“Some think because we have better technology, it’ll be different — that’s stupid and naive,” said Eastside for Hire manager Samatar Guled.

UberX CEO Travis Kalanick, however, says it’s unlikely Seattle will face the same problems it did in the 1980s if the city allows companies like his to operate without any driver limits, as they have in Seattle since last spring. UberX says half of its drivers are either current or former taxi drivers looking to earn money in their own car on their own schedule.

“If Seattle wants to stay in the 1990s, that’s a decision for the City Council to make,” said Kalanick. “The rest of the world is moving forward.”

Well, not all of it.

Several other cities are wrestling with how to regulate Lyft, uberX and Sidecar as well. Some — including Portland, Austin and New Orleans — have flat-out rejected them. Others — including Minneapolis/St. Paul, Milwaukee and Detroit — have requested the companies abide by the same rules as taxicabs.

Seattle would be the first city to experiment with a cap placed specifically on TNCs.

Safety matters

Better TNC regulations on public-safety matters is one area in which most cities, including Seattle, don’t have as much difficulty building consensus.

After months of refusing to share the details of their insurance policies and cities questioning gaps in insurance coverage, uberX and Lyft announced Friday that they expanded their coverage to address potential insurance gaps. Sidecar says it is looking into doing the same.

“Insurance is something we don’t get out of — it’s something we double down on,” said O’Brien. “I’m really more interested in having someone like uberX held accountable.”